Cucumber Company Concluded at the Beginning of 2018 That the Company's

question 15

Multiple Choice

Cucumber Company concluded at the beginning of 2018 that the company's ownership interest in PickelCo had decreased to the point that it became appropriate to begin accounting for its investment under the fair value through net income method, rather than using the equity method as it had been doing. The balance in the investment account is $75,000 at the time of the change, and accountants working with company records determined that the balance would have been $50,000 if the investment had been accounted for as fair value through net income. At the time of implementing the change to the fair value through net income method, if financial statements were prepared:

• A) Net income and retained earnings will be lower by $25,000.
• B) Net income will be unchanged, and retained earnings will be lower by $25,000.
• C) The accounts will be unchanged, because no adjustment is necessary.
• D) Other comprehensive income and accumulated other comprehensive income will be lower by $25,000.

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Definitions:

Mentor Or Sponsor

A relationship in which an experienced individual (mentor or sponsor) provides guidance, advice, and support to a less experienced person to help them progress in their career or personal development.

Developmental Groups

Groups focused on the growth and development of their members, often through shared learning experiences, skill-building activities, or supportive interactions.

Psychological Groups

Collections of individuals who share emotional connections, common purposes, or identify as members of the same group.

Cohesive Groups

Groups characterized by strong interpersonal bonds among members, leading to high levels of cooperation and team effectiveness.